Nvidia Stock: A Potential AI Powerhouse Amidst Market Fluctuations

1 Wall Street Analyst Thinks Nvidia Stock Is Going to $175. Is It a Buy?

Given the strong momentum for AI, is Wall Street significantly underestimating Nvidia and its AI-powered growth? Nvidia (NVDA 0.89%) stock has been volatile lately. Following recent sell-offs driven by geopolitical risk factors and some disappointing earnings reports from other big tech companies, Nvidia stock has fallen more than 16% from its high. But recent coverage published by Loop Capital suggests that Nvidia could be poised for a rebound and rally over the next year. In a note published July 22, the firm's lead analyst on the stock, Ananda Baruah, reiterated a buy rating on the artificial intelligence (AI) leader. Baruah also raised his one-year price target on the stock from $120 per share to $175 per share. With the stock priced at $114.25 per share as of this writing, the new target would suggest an upside of 54% over the next 12 months. Is Wall Street underestimating Nvidia stock? In Loop Capital's recent write-up on Nvidia, Baruah said that he thinks Nvidia has the potential to significantly outperform Wall Street's expectations. In particular, the analyst thinks that the company's data center segment could deliver revenue of between $215 billion and $240 billion -- far ahead of the average analyst estimate's call for sales of $145 billion. Baruah also thinks that the AI leader's compute segment can deliver sales of between $200 billion and $225 billion -- ahead of the average Wall Street target's call for sales of $132 billion. NVDA PE Ratio (Forward) data by YCharts. With the incredible speed at which the business is expanding, Nvidia stock could still be cheap despite also having a growth-dependent valuation. Last quarter, Nvidia's revenue surged 262% year over year to hit $26 billion -- and earnings per share soared 629% compared to the prior-year period. While it remains to be seen how long the stellar growth momentum will continue, Nvidia looks poised for strong demand through the remainder of the year and should continue to post very impressive margins. For long-term investors looking to back leaders in the AI revolution, the recent stock pullback could be a buying opportunity.

Nvidia Fell Again Today -- Time to Buy the Artificial Intelligence (AI) Leader's Stock?

After a volatile day of trading, Nvidia (NVDA -1.72%) stock ended Thursday's trading in the red. The company's share price fell 1.7% in the session, according to data from S&P Global Market Intelligence. Nvidia stock opened the day's trading down as much as 7%, but it was able to climb to a gain of 2.1% on better-than-expected economic data before retreating to bearish territory after some analysts suggested big-tech earnings could continue to underwhelm. Investors have been pivoting away from the artificial intelligence (AI) leader and other megacap tech stocks amid geopolitical risks and valuation concerns, and recent earnings reports from Alphabet and Tesla have added to selling pressures. Nvidia stock has now fallen in four out of five of its last daily trading sessions. The company's stock is now down roughly 17% from the peak that it reached on June 18. Is it time to buy the high-profile AI stock? Investors can still win with Nvidia stock Nvidia has become a battleground stock -- and arguably the single-most influential company when it comes to shaping performance for the stock market at large. Its graphics processing units (GPUs) and other accelerated computing technologies are the go-to platform for powering advanced AI applications. The company's existing strengths in data center computing technologies have been magnified by surging demand for AI services, and the business has seen stellar sales and earnings growth in tandem with the trend. On the other hand, the incredible rise of artificial intelligence technologies is a relatively recent phenomenon -- and that makes it difficult to chart future performance and forecast valuations. Valuations for AI stocks will likely see significant levels of volatility over the next few years as investors try to assess economic opportunities created by the progression of the tech. But Nvidia has strong competitive advantages thanks to its category-leading GPUs and related software platform, and there's a good chance that the company will retain a dominant position in the most important category of artificial intelligence hardware. For long-term investors looking to build exposure to hardware technologies powering key AI trends, taking a dollar-cost-averaging approach to Nvidia stock looks like a smart move right now.

3 reasons to buy Nvidia stock before 29 July

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated. No company in the last year has captured the attention of the investing world quite like Nvidia Corp (NASDAQ: NVDA). The chipmaker dominated headlines as its stock price more than doubled since January, and with good reason; it's proven itself as one of the most important and central companies in the artificial intelligence (AI) boom -- a role that has allowed it to rake in dizzying amounts of cash. AI, if its evangelists are to be believed, has the power to completely transform the global economy, a technological revolution on par with the internet. It's important to maintain a healthy skepticism in the face of so much optimism. Promises of this scale have been made before and they haven't always turned out well for the investors involved. Still, there is reason to think this isn't a simple hype bubble. The potential is certainly self-evident. The crux is whether these companies can deliver on that promise. Nvidia CEO Jensen Huang will join Meta Platforms Inc (NASDAQ: META) CEO Mark Zuckerberg on July 29 to discuss the future of AI at a conference dubbed SIGGRAPH 2024. Hopefully, hearing from two leaders at the forefront of AI will shed some light on developments. Whether the event itself will have a material impact on Nvidia's share price is impossible to know, but there's certainly a chance the two would announce some sort of exciting partnership. Regardless, as the event approaches, let's consider three reasons Nvidia is still a buy. 1. Nvidia is raking in mountains of cash, giving it a lot of room to maneuver Nvidia's revenue growth over the last couple of years has been nothing short of incredible. As the AI gold rush took off, the company was selling proverbial picks to the gold miners. Except these picks cost tens of thousands of dollars. Take a look at the explosion in revenue that happened soon after AI hit the mainstream at the end of 2022. NVDA Revenue (TTM) data by YCharts This revenue growth is coming as the company continues to drive down costs and grow its margins. Free cash flow (FCF) is the cash a company has to play with after all expenses are paid and capital expenditures are made, and is a great measure of a company's financial health. Nvidia grew its FCF by nearly 500% in the last three years; it's now sitting just shy of $40 billion. That is a lot of cash it can use to invest in the future, defend its market share, repurchase stock, or any number of things to make the business stronger and its stock more valuable. 2. Nvidia is at the center of a $16.7 trillion market Nvidia has the cash to help defend its market share, but even if it loses some to competitors like Advanced Micro Devices Inc (NASDAQ: AMD) -- and it likely will lose some -- the market itself is so big and growing so rapidly that it may not matter. PwC -- one of the "big four" accounting firms -- believes AI can add $15.7 trillion to the global economy by 2030. Statista.com predicts a compound annual growth rate (CAGR) for the total AI market of 28.5% through 2030. That growth that can propel Nvidia's business for years to come. 3. Nvidia may look expensive, but its price may be more reasonable if we consider future earnings Nvidia's stock is trading at a hefty premium. The company's price-to-earnings ratio (P/E), one of the most common metrics to value a stock, sits at about 72 today. For context, Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) has a P/E of less than 30. When we look to the future, however, the picture looks a little different. Nvidia's forward P/E sits at 45, a more reasonable valuation, even if it's still on the high end. To me, Nvidia's place at the center of the AI boom and the future earnings potential that provides easily justify a premium.